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people 2013-08-13

Understand customer's taste and it becomes easy to start your restaurant business anywhere

An Interview with Smita Jatia, MD, South and West India, Mc Donald\\\'s.

Understand customer's taste and it becomes easy to start your restaurant business anywhere

In a candid chat with Franchise India, Ms. Jatia talks about the Mc Donald’s sustainability issues, its competitors and more importantly its understanding of the pulse of customers.

Phase Achievement

We set up mainly into 3 phases: the starting phase named the local phase, where the main thing was setting the local supply chain, the backward integration with farmers and respect of local cultures (separate kitchen for veg and non- Veg culture) called bifurcation. It was very critical for us to get into the Indian market and these were the pillars why the local phase was successful. The second phase was built phase (1997- 2004).  This phase ensured that we have pure Mc Donald’s product burgers like, Aaloo tikki burger, the Chicken Mcgrill burger thus ensuring the right palate and product for the people. Finally the growth phase started in 2005 when we introduced varieties in menu and the range entered. This was what purely helped us in getting the customers.  We are now getting into the acceleration phase (opening 75-100 restaurants next year).

Applying Menu Tweaks

We have done no menu tweaks.  Aaloo tikki is very popular in Gujarat. We didn’t have to introduce any new sweet burger. We recently introduced McMasala grill as our new veg recipe.

We have the same menu for the whole country. We don’t have different menus for East, West, North and South India. The menu appeals for important targets customers. It may happen that a product sells much in West India and another menu say B sells much on the other region. However the menu is same for the whole nation. We offer pure Mc Donald’s products whether be it Mumbai, Gujarat, Rajasthan or any other part of the country.

We are a long term player. Even when we entered south we didn’t do what you call fighting against the local food. It is about carving our own position in the minds of the customer. That’s the position we want to occupy. We have global products and we try to localise like Aaloo tikki burger which has become a household name. One of the products which are really connected with south customer is spicy McChicken which we introduced in 2010. In order to own any market it is important to understand the customer with the right taste, and if you have this equation right it is easy to start your business anywhere in south, north, east and west.

Competitors

We take eating out as an occasion which we can own. On an average a customer eats 3 times a month. So for us our competitors are the house wives in other words they were converting home occasion into an eating out occasion. So, this very much built the category of quick service restaurant. I think the competition which we faced were not from any of road side vendors, Indian fast food restaurants. It was a much larger space which we were competing against and we were not competing with a single brand.

Staffing

Today we employ 7000 people and we are very proud to employ people. Those who have completed 12th standard can come and join Mc Donald’s.  And those who are training people we check their life skills like communication skills, cooking skills, etc. These kind of skills are inculcated in Mc Donald’s and we have many tie ups with MBA colleges for our employees so that they can also complete their education even while working for us. This will not only help them in career growth but also in their official growth. I evaluate my success on the team we have built for our company in these years.

Women leadership

At Mc Donald’s, we offer equal and diverse opportunities. No discrimination on sex, religion or socio economic group is done when we hire an employee. We have 35-40 percent of women workforce in India and we give equal and diverse opportunities. Having the right people at the right place in the right job is the motto of Mc Donald’s. We have a very extensive performance development system on individuals’ career and development path.

 Impact of McDonald’s on other chains

During last 16 years Mc Donald’s has pioneered the old revolution into excelling the fast food industry. We were the ones who set up the entire supply chain process. From day 1 we emphasised on Indian taste for the Indian palate which really has worked for us. The New chains which are coming are also copying the menu, the Indianisation of food and following the footprints of Mc Donald’s. So, these are things which I think other restaurants are benefiting from Mc Donald’s.

Sustainability

On a broad perspective, Mc Donald’s is always being responsible for environmental issues like starting the process from farm level to supply chain management and supplier. We really believe in being true to the environment we develop. So we use energy saving technologies as well as waste management processes at our restaurant.

From the beginning, we at McDonald’s India have been a company committed to doing the right thing. Today, our values continue to be the foundation for who we are, what we do, and how we operate.

On the other hand, industrial activities, without proper precautionary measures for environmental protection are known to cause pollution and associated problems. Hence, it is necessary to comply with the regulatory norms for prevention and control of pollution.

McDonald’s India has under taken various initiatives over the years that have been beneficial for the environment as well for the industry at large.

Energy saving Technologies used at McDonalds: Superheat Recovery from HVAC, SHR_WH, VFD for Exhaust, Electronic Ballast for Lighting, Multi Utility Heat Pump with Contacting Device, MU_HPwCD and LED

At the restaurant level, we’re focused globally on three main fronts:  energy efficiency, sustainable packaging and waste management and green restaurant design.

Food inflation

Inflation has been in India since many years and I don’t think this is something we have to take into reality for running any business in our country. So, from the starting if we are completely below the inflation line then the business will become unsustainable. We take the price that is half the rate of the inflation i.e. taking about 2-3 percent price rise year-on-year. We try and see what are the inefficiencies in our business, our supply chain, in our CNL since we don’t want to pass the increases on customer. Even in the tough years of 2008 we had produced extra value meal which is at 25 percent discount. In 2012 we started value added meal because value is the base of any business.

My Journey

My day starts like any other Mumbaikar; it starts at 6-6:30 am. Entire day is calculated with priority for personal time and professional too. And being a woman I need to balance my personal life and work.

I started with Mc Donald’s marketing function in 1997 that time the brand was said to be on build phase. We were trying to build brand when customers liked to eat vada pau and other stuff. As I wanted to learn more about marketing, I shifted to other functions and in 2000 I went to Harvard to get a general management program. After returning I started acquiring other functions and responsibilities like operations, HR, training etc. Slowly from then on I started looking at the strategy and operations part. It was a wonderful journey, both in terms of professional and personal life.

Failure and Accomplishment

First 5 years were very struggling. The brand was being built and the customers were experiencing something new. At restaurant level we were not making money. So it was a tough phase and in that time it was very important to have patience, belief and commitment. I feel these are the things which help a business to develop in a country like India. And there is no shortcut in building any business. Every crisis has a silver lining as well as opportunities that will help you accomplish. When I look back to the last 16 years it looks as an accomplishment. The people who work with me and my team inspire me to do better.

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